Bankers who had it all & gave it up at 40

One Sunday afternoon a couple of years ago, Steve Hawkins was entertaining close friends and family at his home in Sydney to celebrate his son’s third birthday. The affable banker was at the peak of his career. As co-head of equity capital markets at UBS, he was the man behind some of the biggest corporate finance deals in the county. That afternoon, he was also in charge of a barbecue.

Back at the office in Chifley Tower, his colleagues were preparing to underwrite a capital raising worth several hundred million dollars for a major Australian financial institution. In between turns of the sausages, Hawkins darted back and forth to a quiet room to take phone calls from his team and the client.

The deal got done and the sausages didn’t burn. But by the end of the day, Hawkins felt as though he’d let both his colleagues and his family down.

“Being front-line origination is pretty hard work," he says. “A lot of my clients had no compunction calling me at 2am or on a Sunday afternoon in the middle of a family function . . . that’s just the way it is and everybody signs up for that."

Steve Hawkins, Benevolent Society.
Michele Mossop

Burnout at investment banks is not a new phenomenon. Late nights, high pressure and a non-existent social life are responsible for most of the 10 per cent to 20 per cent turnover the industry reports annually. The years since the financial crisis have brought more pressure and challenges. Greater regulation and higher capital requirements have made banks more conservative and forced massive lay-offs. Some believe the industry has permanently shrunk. For those that remain, deals are smaller, less frequent, and are taking much longer to complete. The job’s rewards, meanwhile – large pay packets, perks and stratospheric bonuses – have been drastically cut back.

At one end of the spectrum are the career bankers who couldn’t imagine doing anything else and will fight on whatever the market throws at them. At the other are those who became bankers to make fast money and were always going to disappear at the first sign of a downturn.

But for a certain cohort, the changes sweeping the investment banking industry are occurring at a particular stage in their lives that has made a sea change seem appealing. This group started their banking career in the early 1990s. The past 20 years have been some of the best, and may not be repeated. These bankers have reached the top of their fields but are still only in their early 40s. They want to spend more time with their young families. They are looking for new challenges and, often, more meaning. Other industries, meanwhile, are increasingly looking to hire people with their fund-raising skills.

To put it another way, the risk/reward curve of leaving the safety of a well-paying investment banking job to start a brand new career has dramatically shifted, and the opportunity cost of leaving banking is now much lower.

Related Quotes

Company Profile

This demographic trend may prove to be society’s gain. All types of organisations are now benefiting from intelligent, hard-working bankers who want to make a difference. Charities, for example, have recently become much more sophisticated in the way they design social programs and use incentives to achieve lasting change and are in desperate need of people with specialised finance skills. Having a former banker in your team to explain things also helps when trying to convince donors, particularly in the finance sector, to back a new initiative.

Many bankers have left to find they are working just as hard in their new jobs. But often new meaning compensates for the lack of monetary reward, and makes the burden of stress and overwork easier to bear.

Bankers live in a high-octane world of cutthroat and constant competition where alpha males will stop at nothing to steal a rival’s clients.

The pressure to maintain UBS’s position in Australia as the No. 1 player in equity capital markets took its toll on Hawkins. “As head of origination you’re constantly paranoid," he says. “While you’re sleeping someone is calling your client. It’s relentless and it’s ruthless."

Cameron Robertson, Mission Australia
Louise Kennerley

When a company is planning a billion-dollar acquisition, its executives routinely work around the clock for a couple of weeks. Understandably, they expect a similar level of commitment from their bankers, who are being paid big fees. But while a top 100 company might work intensively on such a transaction once every few years, bankers move straight from one deal to the next.

“I got to the point where always being on call was getting harder and harder . . . I just got tired," 42-year-old Hawkins says.

Banker paranoia has increased as deal flow has dried up. Competition in the overserviced market is fiercer than ever, both internally and between banks. So far this year, equity capital market volumes have reached just $US13.7 billion, down 36 per cent from last year, and on target to be the lowest annual figure in 10 years, according to Dealogic. Merger and acquisition activity is also weak. So far, $US74.4 billion of deals have been announced, a 37 per cent drop from last year.

In the face of lower revenue and profitability, many bankers have been culled in a great washout of the industry. UBS announced in October it would be cutting 10,000 jobs globally. In September, Bank of America Merrill Lynch fired about 40 staff from offices in Australia, Hong Kong and Singapore, while Deutsche Bank dismissed about 80 employees in the Asia-Pacific region, most from its equities division. The average investment banking salary has fallen to $95,199 in September from $102,343 in January, according to the jobs site MyCareer.

A recent survey by eFinancialCareers in Australia found that four out of five people working in financial services were considering leaving the industry. “A number of people are either being forced to leave the industry or are just deciding they’ve had enough and want to move on and have a different take on life," says George McFerran, the head of Asia-Pacific at eFinancialCareers. “If you want to carry on using your skills, you have to think quite carefully about where the opportunity is to adapt. For people who want to do something completely different it can be harder."

After a record year of capital raisings in 2009, Hawkins took a year off to consider his options and started doing some volunteer work with the homeless through UBS. He was interested in charity work, but didn’t think there would be a job for him in the sector. He got talking to Mike Traill, the co-founder of Macquarie Group’s private equity arm, who quit 10 years ago to start Social Ventures Australia. Traill recommended the Benevolent Society, a not-for-profit that works on initiatives and partnerships with philanthropists, corporations and governments. Hawkins has worked there as a business development manager for the past two years. He says the work is challenging, but these days, a Friday afternoon crisis can usually wait until Monday morning.

Hawkins is not the only former senior UBS banker feeling energised by a new role.

Grant Lovett had been telling his wife “this is my last year in banking" every year since 2005. The 45-year-old father of three started work straight after high school, putting himself through university and then a chartered accounting program part-time, before taking banking jobs in London and New York. By the time he had worked his way to head of fixed income at UBS in Sydney, he had never taken a period of extended leave.

“When you’re trading, the brain never switches off," he says. “Every day you’re involved in trading you’re thinking about the market, you’re thinking about a position, you’re thinking about risk."

When Lovett was living in London, he came across a Time Out article

with the headline: “100 reasons why you’ll never regret taking a year out".

“The one that resonated with me was when you’re lying on your death bed, you’re not going to remember the extra year you worked, but you’ll remember the year you took off. I cut that out and kept it and was always looking for the right time."

Last year, when UBS was cutting staff, Lovett decided to take 18 months off to be with his pregnant wife and six-month old baby. He spent a lot of time cataloguing and adding to his vinyl record and book collections, and weighing up his options. One morning last May, he was on Bronte Beach with the kids when he got a call from shadow treasurer
Joe Hockey
.

Lovett had worked with Hockey’s wife, Melissa Babbage, years ago at Bankers Trust, and had recently been to a birthday party for one of Hockey’s children. Hockey said his chief of staff Tony Pearson was taking three months personal leave and wanted to know if Lovett would be interested in filling in. It was coming up to budget time and Lovett thought it would be a great opportunity to help out and learn a few things.

“It’s the Treasury portfolio, so obviously there’s a lot to do with banking," he says. “The government has an initiative to get the corporate bond market going and that’s something we [the Liberal Party] support. There are plenty of things that, from my point of view with a credit and fixed income background, concern me. The whole issue of the level of net debt the government is building up is something I’m interested in pursuing."

In August, Lovett’s role became permanent (Pearson became Hockey’s chief economist and director of policy). While the pay obviously does not compare with what he received at UBS, Lovett says the hours and effort required in the minister’s office are similar. “You get extremely energised from the job itself, the job gives you energy rather than drains you, and that helps to make up for the money."

Lovett says he’s no longer taking overseas holidays or eating out at the best restaurants, but those are changes he was planning to make anyway with a young family.

For Deutsche Bank’s former head of infrastructure and utilities, Cameron Robertson, 41, it was the constant travel and time away from his young family that led him to leave the bank this year and join Mission Australia as its head of corporate finance and treasury. Robertson was at Deutsche Bank for 16 years, and led work on AGL Energy’s $900 million capital raising and hybrid issues for AGL and Origin Energy this year. He is finding plenty of similarities to his old job, whether it be identifying opportunities, dealing with boards, fund-raising, or explaining complex ideas to wealthy investors. Such skills are now helping Mission Australia develop a “social benefit bond", aimed at reducing the reoffending rates of prisoners re-entering society. Under the structure, private investors cover the cost of a program run by Mission Australia and the government pays coupons and returns capital based on its success.

Robertson grew up in a Christian family and says he always wanted to make a social contribution, but for a long time wasn’t sure how he could help. “Many charitable organisations now have a place for people with my skill set, whereas before it was donations in, funds out."

The bond is still a few months away, but Robertson says it will be a commercially attractive investment. In a worst-case scenario – the program failing – investors will have made a donation.

At the Benevolent Society, Hawkins is also leading the development of a social benefit bond to help children who may potentially go into care because they are at risk of being harmed by their parents. It’s the first time such a bond has been used to target this problem.

The society’s chief executive, Anne Hollonds, says it’s a complex project bringing together government and two major banks, Commonwealth Bank and Westpac, and Hawkins’s perspectives and skills have been invaluable in conversations with consortium partners. “You might not expect to see people like Steve in our organisation, but it’s actually a fantastic fit," she says.